Bundlebums

Cablevision’s antitrust suit against Viacom is long overdue, but it might also be too late.

MVPDs have been complaining about channel bundling, or tying, for years. The practice forces operators to carry channels with minimal viewership that could potentially be used to provide more popular fare. Making it worse, these programmers insist on clogging the basic tier. Worse still, programmers with a popular channel or two get away with inflated prices; the expense gets passed along to subscribers, who blame their service providers.

Viacom has been a consistent target of complaints, as has Disney, which among other bundles insists that cable operators carry a serial block of multiple ESPN channels.

Mediacom Communications cheered Cablevision’s move. “…Tying practices of the owners of the most popular cable channels are really hurting consumers, especially those impacted by difficult economic conditions and those, like most of Mediacom’s customers, who live outside of the big cities.”

American Cable Association (ACA) president and CEO Matthew M. Polka said channel bundling is “a problem not just for Cablevision but also for hundreds of small and medium-sized cable operators. If the courts can address this problem, then we believe this would be a good outcome for consumers."

The thing is, trends and technology are leading the industry toward an a la carte model, which promises to undermine programmers’ ability to bundle.

IPTV and over the top are fundamentally a la carte, with programming delivered on a per-channel basis, whether they’re charged that way or not. Delivering TV Everywhere and multiscreen services is also fundamentally an a la carte process.

Several MSOs are giving their subscribers a modified a la carte option, allowing them to choose the individual channels from set of channels divided by subject; in other words, they enable subscribers to build their own tiers.

Meanwhile, Cisco has begun talking about an a la carte future, though it is carefully keeping the discussion in the context of advertising options. TVN-Avail is doing likewise.

Mediacom, in its statement backing Cablevision, intimates that modified a la carte (if not full a la carte) is the way to go. Referring to programmers who force bundling, the company said, “Their refusal to permit cable operators to offer the most expensive networks on an a la carte basis has driven the cost of the basic package up to a point where it has become unaffordable for more and more Americans.”

The question then becomes one of how long the Cablevision / Viacom lawsuit drags out. Two years? Three? Four? The longer it goes, the closer the industry gets to going a la carte.

Is it likely that MVPDs will go to full a la carte in four years? I don’t think so. But how much longer would it go after that? No matter who prevails in the lawsuit, they might have bought themselves only a few short years before the whole model goes blooey anyway.